Working Paper: NBER ID: w28063
Authors: Claire Yurong Hong; Xiaomeng Lu; Jun Pan
Abstract: We study household finance in the age of FinTech, where consumption, payments, and investments take place via all-in-one super-apps. We hypothesize that FinTech adoption can improve household risk-taking by breaking down the traditional physical and psychological barriers and enhance financial inclusion. Taking advantage of an individual-level FinTech dataset, we find that higher FinTech adoption, both at the individual-level and the county-level instrumented by distance-from-Hangzhou, results in higher participation and more risk-taking in mutual-fund investments. Moreover, individuals who are otherwise more constrained, those with higher risk tolerance or living in under-banked counties, stand to benefit more from the advent of FinTech.
Keywords: Fintech; Household Finance; Risk Taking; Financial Inclusion
JEL Codes: G11; G50
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| higher consumption growth volatility (E20) | greater risk tolerance (G40) |
| fintech adoption (O14) | enhanced likelihood of investing in mutual funds (G23) |
| fintech adoption (O14) | improved household risktaking (G59) |
| fintech adoption (O14) | participation in risky mutual funds (G11) |
| fintech adoption (O14) | fraction of risky fund purchases (G11) |